Ukraine hosts talks after new bloodshed

Separatist rebels have killed seven Ukrainian soldiers in a bloody ambush in the country's east. Source: AAP

UKRAINE is hosting "national unity" talks after its military suffered its bloodiest day since launching an offensive to oust separatist pro-Moscow rebels in the east.

Insurgents killed seven Ukrainian soldiers in an ambush and firefight near the rebel-held eastern town of Kramatorsk on Tuesday, underscoring the urgency of a new diplomatic push by Europe to resolve the escalating crisis on its doorstep.

European leaders have called for Wednesday's talks in Kiev, being held under a road map drafted by the pan-European security body the OSCE, to be as inclusive as possible.

The meeting, due to start at 1330 GMT (0030 AEDT), will bring together government officials including Prime Minister Arseniy Yatsenyuk as well as lawmakers and former leaders and candidates running in May's crunch presidential election.

But separatist rebels who have overrun more than a dozen towns in the east since early April will not be at the table.

"The Ukrainian leadership is open for an inclusive national unity dialogue," a Ukrainian foreign ministry spokesman said.

"However, it is impossible to engage terrorists, whose objective is to destroy not only national unity but Ukrainian statehood," the spokesman said in a statement Wednesday.

He accused Russia of playing a "dirty game" with a "biased" interpretation of the OSCE road map, and demanded Moscow pull back its troops from the border.

German Chancellor Angela Merkel nevertheless said the talks offered a "good possibility" of finding a way out of the worst crisis between Moscow and the West since the Cold War.

"The more representative the round tables are, the better that is," she said on Tuesday, but added there was no place for those who supported violence.

Her comments came a day after her foreign minister, Frank-Walter Steinmeier, was in Ukraine to push Kiev and pro-Moscow rebels to negotiate before the May 25 presidential election.

Wednesday's roundtable discussions, to be moderated by veteran German diplomat Wolfgang Ischinger, "are of course only a start", Steinmeier said.

EU leaders ramped up the pressure on Russia with new sanctions on Monday, and warned of further "far-reaching" punitive measures if the election failed.

But while voicing support for the OSCE plan, Russia has accused Ukraine's pro-West authorities of refusing "real dialogue" with the separatists.

It demands that Kiev halt its military operation in the east if rebels are to comply with the peace initiative, and insists negotiations on regional rights must take place before the presidential vote.

Concerns over Ukraine's future have been heightened following weekend votes for independence in the eastern industrial provinces of Donetsk and Lugansk.

The referendums were rejected as illegal by Kiev and the West, fearful that Russian President Vladimir Putin would move quickly to annex the territories as he did with Crimea in March.

Donetsk governor Serhiy Taruta said on Tuesday the referendums were nothing more than a "social survey".

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